IMF Sounds Alarm Over Nigeria's Stablecoin Dominance

The International Monetary Fund (IMF) has warned that Nigeria's growing use of stablecoins could pose risks to monetary policy and financial stability. According to the IMF, Nigeria accounts for about 60% of stablecoin inflows into Sub-Saharan Africa since 2019.

The Fund stated that Nigeria received about $59 billion in crypto-asset inflows between July 2023 and June 2024, with the scale of adoption being striking. The report noted that what began as a niche technology has become a meaningful cross-border payments channel, with Nigerian households and small businesses increasingly using stablecoins for international transactions and payments to overseas suppliers.

The IMF warned that widespread use of stablecoins could resemble digital dollarization, weakening the transmission of domestic monetary policy. It also cautioned that existing monitoring systems may not adequately capture transactions routed through digital wallets and crypto exchanges, heightening the risks of money laundering and other illicit financial activities.